New Delhi, April 9: In a pre-poll review of the economy, the government painted a rosy picture although it admitted to posting a higher fiscal deficit.
Sticking to an 8.1 per cent GDP growth forecast, the quarterly statement brought out by the finance ministry said tax revenue growth had hit a high of 12 per cent with Rs 1,64,170 crore collected between April 1 and December-end 2003.
The report, however, admitted that the fiscal deficit at the end of December stood at Rs 92,435 crore, higher by Rs 6,166 crore to last year’s deficit, although it fell as a percentage of the GDP.
The government also contracted fresh debt of Rs 3,37,491 crore with a high internal debt component of Rs 3,29,788 crore. Nearly a third of the debt was used to fund government deficit while the rest went to pay off older debts.
“Deficits increased despite better revenue mobilisation mainly because non-plan expenses like subsidies bloated like anything,” said top finance ministry economists.
Non-plan expenses also increased considerably from Rs 1,91,025 crore in April-December 2002 to Rs 2,39,614 crore in the same period of 2003, an increase of nearly a quarter.
The bulk of the increase was because of subsidy payment bloating by Rs 8,102 crore, interest payouts going up by Rs 5,077 crore, defence spending going up by Rs 2,629 crore and pension payouts by Rs 950 crore.
Subsidy expenditure stood at a high of Rs 37,503 crore, including food at Rs 22,485 crore, fertiliser at Rs 10,080 crore and petroleum at Rs 4,938 crore.
The review, however, did not mirror the impact of the 10.4 per cent GDP growth posted during the third quarter which, the government claims, would push up overall annual growth to beyond 8.1 per cent, economists said.
The review said higher growth would be achieved on the back of a robust agriculture growth as foodgrain production is slated to touch 212.2 million tonnes.
However, economists admitted that some of the third quarter “shine” would be negated by the fact that inflation was slowly inching up once more. Costlier foods, electricity and manufactured products have pushed up inflation to 4.47 per cent for the week ended March 27 and the average for 2003-04 has gone up to 5.18 per cent.
“Frankly, even without having to worry about inflation, we would still be under-performing if we compare ourselves with China,” said officials.
China’s industrial production growth accelerated to 19.4 per cent in March, after growing at 17 per cent during the first two months.
“The Chinese government is now trying to slow down investment in steel, cement, aluminium and other industries due to concerns that capacity may outstrip demand,” said economists. “We are nowhere near that kind of a situation,” they added.